Asia Pacific Graduates’ Youth Forum on Green Economy

25-29 September 2012 Kathmandu, Nepal

Value Addition of Medicinal and

Aromatic Plants: A Sustainable Green Enterprise, a case study from Dolakha, Nepal

-Vivek Dhar Sharma National Programme Assistant vivek@sgp.org.np

Background

• Nepal exports a significant volume of Non Wood Forest Products (NWFPs) and Medicinal and Aromatic Plants (MAPs).

• The volume and value of NWFPs trade in the international and domestic market are very difficult to estimate due to lack of available and reliable data.

• Hertog in 1997 reported that 21.5 million rupees worth NWFP was collected from Salyan district alone.

• The value of medicinal plants in Gokha district was reported at 12.13 million rs corresponding to a volume between 180- 417 tons per year (Olsen, 1997)

• Overseas report of NWFP reported by the Trade Promotion Centre is NRS 17 million per year. But this report does not consider the unrecorded figures of NWFP that are directly exported to India.

• In another report prepared by ANSAB estimated that each year Nepal sells medicinal plants and NWFP, which worth above USD18 million.

• In the fiscal year 1993/94 AD, Nepal had exported equivalent to USD 8.6 million worth NWFPs species which is six times higher than the economic value of the timber exported to India (Edwards, 1994)

• (USD1=Nepalese Rupee 85)

Dolakha

Himalayas

Dolakha rich in NWFPs and MAPs

• Dolakha, a mountainous district in Central Nepal, is rich in non wood forest products and Medicinal and Aromatic Plsnts (MAPs).

• Varied topography, climate and edaphic condition favor the growth of various MAPs.

Establishing the community managed distillation units

• Deudhunga Multipurpose Cooperatives (DMC) has with the support from GEF SGP established distillation units in 3 different clusters in Dolakha to extract essential oils from MAPs in 2007.

• At that time, the units have extracted essential oils from 7 MAPs, collected from 18 certified forests in the district

• Build capacity of local users and members of CFUG on the FSC, CoC and organic certification and maintaining the record for audit and verification.

Green enterprise

• The raw material used is renewable as it followed sustainable harvesting principle

• Use of Stainless Steel distillation unit with boiler is efficient and spent up grass as fuel

• Reduced cost and frequency of transportation

(being low volume but high value)

The 7 MAPs in use

Wintergreen Gaultheria fragrantissimma Leaves, 2000m

Jatamansi (Spikenard) Nardostachys jatamansi Rhizome 3000-5000m

Anthopogon Rhododendron anthopgon Leaves, 3000-4000m

Mugwort Artemesia sps Leaves, 1000-2500m

Juniper Juniper communis Needle and berry, 3000-4000m

Nepalese pepper Zanthoxylum armatum Berry, 1200-3600m

Silver fir Abies spectabilis Needle, 2400-3600m

Value addition

• 500 Kg of wintergreen leaves produces 3.5 kg of essential oil.

• 500 kg of raw wintergreen leaves cost Rs2500

• On the other hand 3.5 Kg of wintergreen oil cost Rs 7,350. (Nearly 3 times)

• Beside, it also reduces the transportation cost

The extraction process

Weighting raw material for purchasing

Paying the collectors Inserting raw material for distillation

Closing lid with chain pulley

Tightening the tube with condenser

Igniting the boiler with dried raw material

The tank, condenser & oil separator.

Removing the essential oil through oil separator

Packing the oil in HDPE food plastic container

The extraction…

Essential oils Marketed by Himalayan Biotrade Limited (HBTL)

Distillation MS vs SS Particular MS SS

Capacity 300 kg of raw material 500 Kg of raw material

Fuelwood required 150 Kg 160 Kg (used up grass is used)

Yield 0.5% (1.5 Kg) 0.7% (3.5 Kg)

Time required 12 hrs 11 hrs

Quality Need further treatment with oxalic acid, oil prone to corrosion

Pure

Others - Have chain pulley and boiler

Socially inclusive enterprise model

• The asset of all the distillation unit is around USD28,392 ; of which

• Deudhunga Multiple Co-operatives own 30% share; 10% HBTL

• community forests own and Pro-poor groups own 30% each.

• The share of pro-poor group was invested by Nepal Swiss Community Forestry Project

Certification

• For the first time in Nepal FSC issued Group certification to FECOFUN, which include certification of 18 community forests having area of 6545ha in 2005 for 5 years.

• FSC also issued CoC for essential oils. • Together the cost is around USD30,000 with

annual audit charge of USD3800. The process is initiated by ANSAB and supported by USAID.

• Organic certification costs around USD1300 and certified 17 essential oils and 44 items of crude NWFPs.

• Annual certification cost around 300,000 and organic certification cost around 150,000 is now borned by Himalayan Bio Trade Limited (HBTL)

• Essential oil produced by DMC is purchased by HBTL

• HBTL also provide loan to establish distillation unit, Total distillation unit in Dolakha has reached 25

• HBTL also provide technical support in establishing 16 distillation units in other 11 districts.

Certification Vs Trade Name of MAPs Quantity

certified

(Kg/ yr)

Quantity

exported(Kg in

2008-2012)

Wintergreen (Gaultheria fragrantissima) 5000 5210

Juniper (Juniperus communis

J. indica)

2000

3500

85

950

Anthopogon (Rhododendron

anthopogon)

500 109

Silver fir (Abies spectabilis) 300 87

Jatamansi (Nardostachys grandiflora) 500 143

Mugwort (Artemisia sps) 200 50

Nepalese pepper (Zanthoxylum armatum) 2000 80

Total 14,000 6714

The cash flow (NRs) and Market 2008 2009 2010 2011 2012 T0tal Net

profit

Payment to DMC

5,500,000 2,730,000 5,512,500 6,020,000 7,620,000 27,002,500 10-15

Sales 6,989,250 1,500,000 3,439,700 8,630,000 5,523,500 26,082,450 15-20

No of foreign buyers

1 3 5 10 19

No of countries

1 3 4 6 14

Essential oils are in stock in HBTL and domestic sales records are not included.

Acknowledgement

• Deudhunga Multipurpose Cooperative (DMC), Dolakha

• Himalayan Bio Trade Ltd (HBTL)

• Community Forest User Groups of Dolakha

• Mr. Parbat Gurung, Mr. Khilendra Gurung and Ramesh Lama

Thanks to all of you !!!